Baylor University and Wayne State University Marketing Professors Recommend Response Strategies for Brand CrisesJune 24, 2011
When a corporation draws negative publicity for an adverse event, its brand's reputation can suffer, even if the allegations are false. Chris Pullig, Ph.D., department chair and associate professor of marketing at Baylor University's Hankamer School of Business and colleague Sujay Dutta, Ph.D., assistant professor of marketing in Wayne State University's School of Business Administration in Detroit, offer research-based insight that can help brand owners and managers salvage a brand's reputation after a crisis.
The pair's research implies that most brand crises can be placed in one of two categories and examines three response strategies that organizations commonly use to address brand crises. The findings reveal that certain strategies are more effective than others.
The complete findings of their research are available in the article, "Effectiveness of corporate responses to brand crises: The role of crisis type and response strategies," which is forthcoming in the Journal of Business Research. A copy of the in-press article is available here.
The crisis types
A performance-related crisis usually involves a defective product. An example is an automobile with sudden acceleration problems. This type of crisis adversely affects consumers' perceptions of a brand's ability to deliver expected functionality.
A values-related crisis does not directly involve the product; it centers on social or ethical issues associated with the brand, such as the use of child labor in the manufacture of apparel. A crisis of this type negatively impacts a brand if consumers perceive a reduced ability to provide symbolic and psychological benefits.
The response strategies
According to Dutta and Pullig, an organization will typically exercise a corrective action, reduction-of-offensiveness, or denial strategy when faced with a brand crisis.
When a company takes corrective action, it accepts responsibility and promises to correct and prevent future crises. When employing a reduction-of-offensiveness strategy, a company offers some explanation but does not provide details about plans for the prevention of the wrongdoing. A denial strategy is initiated when a firm denies that an event occurred or does not accept responsibility for involvement in a crisis.
Which strategy is most effective?
"Overall, for a performance-related crisis, we found that corrective action is the most effective response," said Pullig.
The research shows that when a company takes corrective action, consumers display more confidence in the brand, a better outlook toward the brand post-crisis and a willingness to consider the brand over its competitors.
Surprisingly, the research reveals that in a values-related crisis, the less obligatory reduction-of-offensiveness strategy is as effective as corrective action in repairing brand image in a consumer's mind.
"We found that if a company offers an explanation that attempts to reduce consumers' perceptions of the severity of the crisis, it works just as well as corrective action," Dutta said. "Initiating such a strategy has the potential to save an organization a great deal of money if the crisis fits the 'values-related' category."
The results also suggest that denial is the least effective response to both performance-related and values-related crises, even if the allegations against a company are false.
"Denial, given its non-committal nature, is the least effective response regardless of the crisis type," said Pullig. "Consumers appear to be more skeptical of company responses than they are of media accounts."
"Firms have the right to deny involvement in a crisis if that is the truth. However, consumers categorically reject denial, perhaps because they are skeptical of such a response," Dutta said. "It is rather unfortunate that businesses cannot take recourse to denial even when they might be falsely implicated in a crisis."